Lumentum closes Datacom product line sale to CIG

The transceiver product lines acquired by CIG were previously developed and manufactured by Lumentum's subsidiary Oclaro Japan, Inc. In connection with the closing of the transaction, Lumentum and CIG entered into a long-term supply agreement for Lumentum's photonic chips. "The closing of the transaction with CIG is a key milestone in the shift in Lumentum's strategy to focus on photonic chips while continuing to participate in the anticipated large growth in datacom transceiver volumes driven by datacenter expansion and 5G wireless over the coming years," says Walter Jankovic, Lumentum's Senior Vice President and General Manager, Datacom, in a press release. "We are highly focused on accelerating innovation at the photonic chip level and have a strong pipeline of new chip products." As a result of the timing of the divestiture close, which occurred following the end of the fiscal third quarter, the divestiture will not impact Lumentum's financial results for the third quarter which ended March 30, 2019. Lumentum expects revenue from datacom transceivers will decline in the fourth quarter relative to the fiscal third quarter by approximately USD 20 million to USD 25 million, with approximately USD 20 million of the decline related to the divestiture and an additional USD 5 million due to continuing declines in remaining datacom transceiver revenues. As part of the shift in Lumentum's datacom strategy to focus on photonic chips, it expects revenue from the remaining datacom transceiver product lines to decline to zero over the next 12-18 months.